Many people are drawn to investing in gold and Treasury bonds because they see these options as fairly secure compared to other investments. Treasury bonds, in particular, have stayed dependable even during past economic downturns since they’re backed by a strong global taxpayer base. This makes them appealing for folks nearing retirement who want a steady income.
But, while there are clear benefits to investing in Treasury bonds, it’s essential to be aware of their downsides too. Whether or not Treasury bonds are a good fit for you can depend on your own financial needs and situation.
One major drawback of Treasury bonds is that they offer low returns. Despite their safety and the recent downgrade of the US credit rating to AA, these bonds don’t yield much. Experts at Golden Eagle Coin note that in times of high inflation, the returns might not even keep up with the rising prices. So, although Treasury bonds might be a reliable income source once you’ve saved enough, they’re not great for significantly growing your savings. They are more suited for preserving your capital and ensuring financial security.
There’s also the issue brought up during the recent debate on the debt ceiling – the potential risk of a US default on Treasury bonds. This doesn’t necessarily mean you would lose all your money, but it might mean you could face delays in accessing your funds if the government decides to extend maturity dates in the event of a “default” by wealthy countries.
However, the likelihood of the US defaulting soon is pretty low. The country’s borrowing abilities have grown, and if needed, various government and quasi-government entities can create more money to pay off debts, though this might lead to inflation, which could hurt savings.
In summary, while many investors find the safety of Treasury bonds reassuring, those looking for higher returns might be disappointed. The low-interest yields are their biggest downside, so they may not be the best choice if you want to grow your savings substantially.